One of the things I really enjoy about working in tax is it’s constantly changing, so there’s always something new and interesting to learn about.

I do appreciate, however, this probably isn’t as much fun for the rest of you. The recent flip-flopping around property rules has no doubt had a few of you tearing your hair out, and there have been other changes such as increases to individual and trust tax rates. 

And now, depending on how the election goes, we might be getting a capital gains tax.

So how do you plan for the future when the tax rules are frequently changing?

Renowned tax expert Terry Boucher recently offered a clue in his weekly tax podcast (yes that’s a thing):

“Don’t let the tax tail wag the investment dog.”

It’s a great point I think. It’s precisely because tax is so uncertain that you shouldn’t plan things around it. 

In the tax world we see a range of approaches to tax. Some take a pretty laid-back approach, while others will scrutinise every dollar.

Both approaches have pros and cons, but focusing too much on tax can, as Terry alluded to, lead to the wrong outcomes. In extreme cases, it may even be illegal. 

What I’m about to say may sound strange, but when working out an investment strategy, your tax advisor should be the last person you talk to.

Why do I say that? Well, there are lots of things to consider when planning investments and most of them have little to do with tax. Financial goals, succession planning, market forecasts and trends, and lifestyle choices are just a few of the factors that need to be accounted for. 

An investment that works well for tax, for example, won’t help you much if you can’t cash it in when you need to, or if it doesn’t deliver good returns. 

Now obviously tax does matter where different investments deliver otherwise similar outcomes. But work out what you want to do first, then come talk to us to figure out the most tax-efficient way to do it.

Alex Cull

Tax Partner, Greenhawk Chartered Accountants

0800 422 526 | [email protected] | greenhawk.co.nz

91 Sir Tim Wallis Drive, Wānaka